2020 adex may shrink 16%, says BCG-CII report

Advertising revenues saw a dip as a result of the pandemic and are expected to be ~16% lower than in 2019, with ads on all media except digital expected to experience double-digit rates of decline in 2020, said BCG-CII report.

"Though a cautious recovery seems to be underway and marquee events such as IPL have been able to grow over their 2019 levels, smaller events may continue to face pressure for some more time," the report added.

Highlighting the growth opportunities in Indian M&E sector, the report said, "While the Indian M&E industry already has a significant impact on India’s economy, benchmarking with other countries indicates plenty of headroom for growth. While segments like OTT are growing extremely fast and are making a significant contribution, a lot more segments can potentially scale up. However, to achieve the industry’s true potential, there are a few areas where concerted effort needs to be made. These areas include creating more original and local language content to cater to diverse audiences, provide better data and flexibility to advertisers, create content to tap the global market, and investments in skilling and technology."

K Madhavan, Chairman, CII National Committee on Media and Entertainment and Managing Director, Star and Disney India, said, "The pandemic outbreak created many unique challenges to the media and entertainment sector. It was commendable to see the entire industry rise to the occasion to engage and entertain millions of viewers while they were confined at home. It’s the sheer willpower and persistence showed by the stakeholders that have helped convert adversities into opportunities.”

According to the report, 2020 has seen a massive surge in TV and smartphone video viewership during the weeks of lockdown and beyond as people spent more time at home, and OTT witnessed its presence increase in tier 2-4 cities due to the high quality, original, and local content marketed using free trials. Covid-19 has had a major impact on how we consume content, both in-home and outside and some of these will have long-term implications for the industry.

“India continues its unique multimodal growth. TV consumption surged ~40% during lockdown due to an increase in non-prime time viewing. Smartphone video consumption is up as well, with a 50-60% increase in subscribers over last year. Going forward, we expect the digital trend to intensify, OTT adoption to continue rising, and the emergence of new business models better suited to the new reality. The share of digital in advertising will also continue to grow, having reached 15% in 2020, a full two years before its pre-Covid forecast,” said Mandeep Kohli, Partner, Boston Consulting Group India.

As was the case with other industries, this past year has been a challenging one for the M&E industry as well. There were operational challenges such as those in content creation and distribution through conventional platforms. These challenges were made worse by the accompanying financial blow of declining ad spends across different media. However, things seemed to have turned the corner.

“Recent developments such as the resumption of operations and recovery of ad campaigns have resulted in optimism in the industry,” said Kanchan Samtani, Managing Director and Partner, Boston Consulting Group India.

One of the major themes in this year’s report is the potential economic impact the media and entertainment industry can create. This is especially important in the context of the ambitious GDP target of $5 trillion that has been set by the government. The report demonstrates how in economies such as South Korea, the media and entertainment industry form a large and growing part of GDP due to concerted efforts by stakeholders to take Korean culture global. The report highlights opportunities in attractive parts of the value chain such as visual effects and animation, and calls out imperatives that will need to be acted upon to seize these opportunities.

“Countries are developing media hubs to drive impact of M&E – Spain has set up a content city in Madrid to tap into the growing global demand for Spanish content. This gives a boost not only to the M&E industry but also to the tourism and India should aspire to do the same. Continued focus on customer value, increasing our presence in areas such as VFX and animation, and concerted investment in skilling and technology can lay the groundwork needed to help Indian M&E achieve greater heights,” said Kanchan Samtani.

Setting the tone for the coming year, K Madhavan said, “This year brought about a dynamic change within the industry with everyone adopting a new learning curve to stay strong and relevant. It is truly intriguing to see how the entertainment world has embraced being remote and virtual, and as we enter 2021, we will need to continue to stay focused on bringing back the sector to a growth trajectory.”

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